Category: Customer Loyalty

An “Intel Inside” Future of Branding

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What I am about to say is inspired by the discussion from my MBA Internet marketing class. I was showing examples of RSS and XML technology, when a student named Natalie raised the question of what all this could mean to a business. The ensuing discussion concluded that the meaning of brand and marketing will change dramatically from what it is now now.

With semantic-based XML and RSS technologies, it is infinitely easier to pull together information on a particular topic from all over the Web into one central location. Websites such as Kayak.com have already demonstrated this concept by “researching” across a wide range of websites to find its users the best deal in travel. The news panel on the right side of this page is another illustration of the concept. All of this information aggregation and (re)classification means that existing information and services provided by known brand names (e.g., CNN, Business Week) can be shuffled and repackaged to create a new service shaped by its own creator, with or without any new content being added. The outcome is potential “generification” of brand names into mass components that consumers and resellers can mix and match to create their own “product”.

The best analogy of this business model in the offline world is that of a concierge or a tour guide. The concierge does not necessarily create a new scenery but rather put together existing events, worthwhile sights, and palatable local eateries into an unforgettable experience for the visitor. The value added is the knowledge the concierge has about what is available in the area and about what the visitor is looking for.

What this traditional business model shows is the ultimate focus on value creation and need satisfaction. Whoever can satisfy a consumer’s idiosyncratic needs better than everyone else will win the consumer’s heart. While this focus on value creation is nothing new to business, the next decade of generic services will make this even more important. What we will see is information/service aggregators collaborating and competing with each other by pulling together various mass components to create the best value for the user; and traditional brand names, on the other hand, will excel by providing quality components for these aggregators in an “Intel Inside” fashion.

Wireless Companies Need to Update Their Marketing Strategy

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For those who use cell phones, it is a well-known fact that when you first join a wireless service provider, you can buy a phone at a very low price or even for free. But once you have used the company for a while, if you try to upgrade your phone to a newer model, you are charged a hefty price for it. Although some companies offer a discount on phones if you are willing to extend your contract, the discount is much smaller compared with what new customers get. Below is a comparison of the prices a new vs. existing T-mobile customer (i.e., me) would receive on the same phone models:

Phone | w/o Extension | w/ 2-year extension | New customers

Nokia 6103 | $149.99 | $49.99 | $0

Motorola W490 | $159.99 | $109.99 | $49.99

Dash | $399.99 | $267.99 | $149.99

One can envision the reason for charging a higher price to existing customers when, in old days, people were locked in to a company by their phone numbers. If you wanted to switch to a different wireless provider, you would lose your number. That was a significant switching cost for a consumer. Therefore, it took “sweeter” deals to lure people to switch. Now with the portability of phone numbers, such a switching barrier is no longer present. By still offering much lower prices to new signups, cell phone companies are essentially encouraging consumers to switch providers frequently rather than staying with one firm.

While firms do have a need to make a profit and should not give everything away, under the new business environment, it makes much more sense to reverse the pricing strategy and offer existing customers a deeper discount instead. From a customer relationship management perspective, it is much more economical and efficient to keep your existing customers rather than trying to chase after new ones. When a consumer’s existing contract is about to expire with a wireless provider, the provider should offer the consumer an incentive to happily stay rather than going back onto the market and starting to look for better deals from another provider.

In sum, wireless companies should adapt their existing pricing strategy to the new market environment and aim to build a more profitable business around a core group of loyal customers rather than “hoppers”.

A Love and Hate Relationship with Google

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In a classroom discussion of brand personalification, I asked students how they would describe Google if it were a person. The words my students came up with were all very positive, “helpful”, “efficient”, “reliable”, you name it. One student even said that if Google were a person, she would fall in love with him. Like my students, I am too in love with Google. Yet at the same time, I hate Google. Or more accurately, I hate the fact that I love Google so much. Most things I do daily — email, search, documents, news — all depend on Google. Even this blog is on Google. I cannot remember a day being online without using a Google feature at least once.

So what do I hate about Google? The fact that it knows too much about me as an individual. Imagine someone peeking into Google’s database (legally or illegally), he can find out a lot about me, what I do, and what is happening in my life. In this day and age, information is power. And having a lot of information means owning a lot of power, even if it is only potential power that has yet to be unleashed. That power makes me fearful.

Yes, I do have a choice. There is nothing coercive about Google’s services. I, as a consumer, chose to submit to it. Like many others, I started with its search engine. It produced far superior results and soon became the only search engine I would use. Then through a friend, I got into Gmail. I was instantly attracted to the way it allows you to organize information through tagging (or in its terms labeling). Every product I have tried from Google, it almost never failed to amaze me.

Yet as I added more and more Google usage into my online life, I became more and more concerned that I am becoming too reliant on the company as my online “everything” provider. Now comes the part why I hate myself for loving Google. Many a times, I wanted to disperse my activities across different websites instead. But eventually I would give up on the idea, because I could not find something else that can do what I need like Google does.

I am intrigued by the ethical implications of all this. Because there is no coercive component, theoretically it is ethical. But how do you deal with a situation like this, where a company’s product can be so superior that the company can potentially demand a lot out of consumers, and consumers will be OK with it? What if it is the choice between having crappy products/services vs. revealing your personal information and posing danger to your privacy? It is like a forbidden fruit that promises you immediate benefits but can cause potential dangers in the long term. It is only natural that most people value current gains more than future benefits. So although we can choose, in a way, we don’t have a choice.

I still want to do something about my love and hate relationship with Google. More and more, I want to stop my addiction to this potential danger. I am reading a book called “The Google Story”, which chronicles the history and development of Google. Although I have not gotten to it yet, the last chapter in the book was on how Google is experimenting with genetic science. Imagine Google also knowing my genetic codes. Now that is REALLY scary.